Interviews

EU Parliament member: Situation in Cyprus is 'appalling'

This is a rush transcript from "Your World," March 27, 2013. This copy may not be in its final form and may be updated.

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UNIDENTIFIED FEMALE: We don't have any real feedback of what money we actually have in the banks.

UNIDENTIFIED FEMALE: The situation is probably worse than what anyone is letting us know.

UNIDENTIFIED FEMALE: It's like a dream. Tomorrow, we -- suppose we wake up and tomorrow morning is going to be everything is OK, but I guess this is not going to be happening.

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NEIL CAVUTO, HOST: Well, they're worried in Cyprus.

You would be too, because while they're just hours away from finally being able to get their money out of their bank, the government is limiting just how much money they can take out and keeping track of who is coming back.

Welcome, everybody. I'm Neil Cavuto.

And ahead of banks reopening in Cyprus tomorrow, word of just how little money depositors will be able to take out when they can and do, 300 euros tops. And if you think you can cash a check, tough. Cyprus officials also cracking down on any wire transfers out of the country and making sure that no one takes more than 3,000 euros from the country.

They're trying to prevent what they call a bank run by insisting their strong-arming is for citizens' own good.

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MICHALIS SARRIS, CYPRUS FINANCE MINISTER: Believe some sort of capital controls that will moderate whatever outflows are bound to happen will restore confidence and they will be removed in a relatively short period of time.

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CAVUTO: But all is not quite so hunky-dory if you're a wealthier depositor, because, you see, the government may have up to 40 percent of what is in your account just like that.

And average Cypriots are worrying over what is to come of their accounts. And then there is this, news out of her majesty's kingdom, an unprecedented move on the part of the British government to sort of build an insurance fund, a $38 billion fund, sort of a just in case fund if everything hits the fan. They have got some money aside just in case.

E.U. Parliament member Nigel Farage says the government there isn't calming. In fact, the whole world is watching.

What do you think of what is going on here, Nigel?

NIGEL FARAGE, U.K. INDEPENDENCE PARTY LEADER: It's simply appalling.

I made some very dire predictions about the Eurozone over the course of the last few years, and bear in mind this is the fifth country out of 17 to need to be bailed out. But even in my most catastrophic predictions, I never thought that the European Union would resort to stealing money from people's bank accounts just to keep propped up a currency that clearly doesn't work and needs to be broken up.

And what's happened here is politics, Northern European politics, has hit the Eurozone. Angela Merkel has a big election coming up in September this year. She wants to get the chancellor's job back. If she shows the German people that she's weak, she won't get re-elected.

And that is what this is all about. But, you see, this now goes much broader than just Cyprus, because not only have they shown that they will take money out of big depositors' accounts. They were also prepared, despite their own European guarantees, to take money from the accounts with less than 100,000 euros.

And I think the signal, the message this sends, particularly to Spain, Portugal and Italy, who are in some trouble, and, frankly, my message to people is if you're an investor in banks in those Eurozone countries, get your money out while you can because one day they will come for you too.

CAVUTO: Well, obviously, something's going on in your beautiful country because for the government to start working on a contingency fund and setting aside I think, Nigel, something in the vicinity of 38 billion U.S. dollars as an insurance fund, I assume to brace for a possible run at the banks or a fear that the banks get hit or the financial system gets hit, they're not idiots over there.

So what are they fearing?

FARAGE: No. They are fearing that the inevitable reality, particularly with the Spanish banking sector, is going to play out possibly over the course of the next few months. The extent to which we're liable too in Britain, as are the Germans, as are the French, to other Eurozone countries, what we have seen in Cyprus I'm afraid I think is going to spread to other parts of the Mediterranean.

And the British government, and there's not much they do that I applaud, but I think to put aside a contingency fund in case things go wrong is actually a rather sensible thing to be doing right now.

CAVUTO: I'm sure other countries are doing the same.

We just got word out of Britain, I'm sure other countries, just to be prudent, would set aside some funds. But is the fear, as I understand it, Nigel, that it leads to people just getting anxious about the safety of their money, not just rich folks who worry about their deposits getting raided, but whether average folks will have limits put on them as to how much they can take out of their account, sort of what is going on in Cyprus and they don't want to take any chances?

FARAGE: Yeah. Yeah.

There are two things, aren't there? Firstly, we have effectively got capital controls now that have been imposed in Cyprus. And whatever assurances the government gives that this is short term, it doesn't look very short term to me. And I guess the other problem is that although the final deal did not steal money from bank accounts with less than 100,000 euros, originally, they had proposed to take 7 percent even of the small investors and small businesses' money.

And I think that the European government, the European Union government has now crossed a line. They have shown they're so fanatical they're prepared to do absolutely anything to defend this failing Eurozone. And, frankly, as I say, if I was a small investor in Spain, I would get my money out as quickly as I possibly can.

So the unintended consequence of taking an action designed to get Mrs. Merkel re-elected is there is going to be a knock-on to other banking systems in the Eurozone. That's why the British government have acted the way they have today.

CAVUTO: Boy, they pay a hell of a lot of money to be in a stupid club. Right? That's what it is, a stupid club.

FARAGE: Yeah, well absolutely.

CAVUTO: Yes.

FARAGE: Well, we have got here is a political dream.

CAVUTO: Right.

FARAGE: It's the updated version of communism.

The idea is we can take all these different languages and cultures and histories in Europe, force them all together under an undemocratic form of government. And that's why we're getting such bad decisions, raiding bank accounts, putting fear into everybody.

CAVUTO: Right.

FARAGE: Democracy may have its failings, but it gives better decision- making processes than unelected European commissions and European central banks.

CAVUTO: All right, thank you, Nigel. That is well-put.

FARAGE: Thank you.

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